Shares of GameStop (NYSE:GME) stock are in the red today despite a position update from Roaring Kitty on Reddit.
Over the weekend, an account associated with Roaring Kitty — real name Keith Gill — posted a screenshot disclosing ownership of 5 million shares of GME as well as 120,000 $20 GME calls expiring on June 21. The positions were worth a combined $181.40 million at the time.
After yesterday’s close, the account posted another screenshot on Reddit, this time disclosing that it had not sold out of its position in GME stock and calls. Meanwhile, the value of the position had shot up to $260 million, or a gain of about 43% since the last update.
According to Unusual Whales, Kitty acquired his options stake between May 20 and May 31. Data from Trade Alert also showed that there were 145,000 open options contract at the end of May compared to just 15,000 on May 19.
GME Stock: Roaring Kitty Maintains Position
Still, Roaring Kitty is at risk of a major issue, which is offloading his massive options stake. If the contracts expire in the money, that would mean he has to take delivery of 12 million shares since each contract represents 100 shares.
“Unless he is super committed to being a long term investor and taking delivery of (the shares), it’s going to be challenging to monetize this without moving the market just because everybody’s hyper aware of this now,” said OptionMetrics Head of Quantitative Research Garrett DeSimone, per StreetInsider.
Roaring Kitty’s screenshot was from E*Trade, which is owned by Morgan Stanley (NYSE:MS). According to The Wall Street Journal, E*Trade is reportedly considering banning Roaring Kitty from the platform due to market manipulation concerns. Internal discussions concerning this topic began several weeks ago following Gill’s return to X (formerly Twitter) with a picture of a gamer leaning forward in their chair. That post drove a massive rally in GME stock.
WSJ was informed by sources from Morgan Stanley that Gill purchased GME call options before the post was sent out.
With all the talk surrounding Roaring Kitty, many GME stock shareholders have forgotten that GameStop actually operates a business and is not just a speculation vehicle. The video game retailer expects first-quarter revenue to fall by about 29% year-over-year (YOY) while still operating at a net loss.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
